As part of a study into the general insurance (GI) market, the FSA revealed that firms did not clearly state the level of advice that consumers would receive and indicated a number of failings by firms in the GI sector.
The FSA expressed its concerns that intermediaries had failed to gather sufficient information about their customers to make a recommendation, while a number of firms failed to detail and demonstrate if their staff had adequate training and knowledge about the products and sector.
Some firms had also failed to monitor their advisers, with some of those questioned admitting to not updating their files on a regular basis.
The regulator also confirmed that some of the intermediary firms targeted had failed to complete fact finds for their customers and had failed to demonstrate why a particular product had been recommended.
Hugh Nichols, partner at Badbury Berkeley Financial Services, admitted the regulator would have its hands full with the insurance market. He said: “The general insurance market is full of paperwork, and it is inevitable that things are going to go wrong with it. To most brokers it makes up just a small percentage of their business, and I suspect that there are problems within the market, which the FSA has showed in its study. I don’t think the FSA will be able to fully regulate the market.”
As part of its study, the FSA visited 28 firms and reviewed questionnaire results and sample documentation from a further 60.
